Sunday, April 01, 2012

You can't read a financial publication or website without being warned that the market is about to have a nasty correction. After all, that's what happened in 2010 and 2011. As we all know, whatever happened most recently always continues to happen in the future.

Well. Maybe not. Lots of money has been lost playing the previous market trends and ignoring what is going on in the here and now.

Yes, the market has had an incredible run and trees don't grow to the sky. The history of market seasonality tells us that the market makes most of its gains from fall to spring, not spring to fall. I find myself with a large cash position and investments in low-beta dividend paying kinds of things.

There's China. There's Israel and Iran. There's high energy prices. America's debt crisis is growing from small municipalities to states to the federal government. Unemployment remains stubbornly high..

But April is one of the stronger months of the year for stock returns. We are at the beginning of the month where money is dollar cost averaged into the stock market. China just reported economic data that is being received well, thus maybe removing one of the wall of worry items from the bear case. The "market seasonality" trade is getting noisy -- contrarian alert?

But there are always bull and bear sides. Not making a decision is making a decision.

I will remain cautious going forward, with cash and low beta while looking for an opportunity to get more aggressive on The Coming Market Correction.

***

And... I have hedged my positions by going long on the Dodgers to win the World Series.

You can't read a financial publication or website without being warned that the market is about to have a nasty correction. After all, that's what happened in 2010 and 2011. As we all know, whatever happened most recently always continues to happen in the future.

Well. Maybe not. Lots of money has been lost playing the previous market trends and ignoring what is going on in the here and now.

Yes, the market has had an incredible run and trees don't grow to the sky. The history of market seasonality tells us that the market makes most of its gains from fall to spring, not spring to fall. I find myself with a large cash position and investments in low-beta dividend paying kinds of things.

There's China. There's Israel and Iran. There's high energy prices. America's debt crisis is growing from small municipalities to states to the federal government. Unemployment remains stubbornly high..

But April is one of the stronger months of the year for stock returns. We are at the beginning of the month where money is dollar cost averaged into the stock market. China just reported economic data that is being received well, thus maybe removing one of the wall of worry items from the bear case. The "market seasonality" trade is getting noisy -- contrarian alert?

But there are always bull and bear sides. Not making a decision is making a decision.

I will remain cautious going forward, with cash and low beta while looking for an opportunity to get more aggressive on The Coming Market Correction.

***

And... I have hedged my positions by going long on the Dodgers to win the World Series.